Moody’s downgrades Greece – Greek FinMin Reaction!

Moody’s downgrades Greece’s debt to junk status

from Associated Press “Moody’s Investors Service slashed Greece’s credit rating to junk status on Monday in a new blow to the debt-ridden country that is under intense international scrutiny after narrowly avoiding default last month.

A Moody’s statement said it was cutting Greece’s government bond ratings by four notches to Ba1 from A3, with a stable outlook for the next 12-18 months. It was the second of the three major agencies to accord Greek bonds junk status. Standard & Poor’s did the same in late April The downgrades reflect concern that the country could fail to meet its obligations to cut its deficit and pay down its debt — which the Greek government says is out of the question. After amassing a vast public debt and overspending that sent its budget deficit spiraling to 13.6 percent of gross domestic product in 2009, Greece was saved from defaulting on its loans in May by the first installment of a joint EU and IMF euro110 billion bailout. It is to receive the second in September, pending implementation of a major austerity program that has sparked strong union reaction and a series of damaging strikes.

“The Ba1 rating reflects our analysis of the balance of the strengths and risks associated with the Eurozone/IMF support package,” said Moody’s lead analyst for Greece Sarah Carlson. ”

“The current decline of the Greek economy from the firm Moody’s in no way reflects either the progress made in recent months or the opportunities provided by the fiscal consolidation and improving the country’s competitiveness.

The budget execution data show very clearly that the program has been agreed by Greece in the EU, the ESF and D.N.T. running normally, the deficit has declined 40% compared with 2009. This significant improvement has been recognized by the European Commission, the European Central Bank and the International Monetary Fund. Moreover, the recession in the first quarter is lower than that for the full year from the Memorandum. Revenue from VAT, which was created during the first quarter increased by 6% while last year had decreased by 11%.

All the different structural measures specified in the Memorandum of Cooperation are implemented properly and many are already ahead of schedule that has been set. And the state debt, although now rising, is expected to de-escalate in 2013 and maybe earlier if it appears to be developed progressively more favorable conditions.

The Greek government remains absolutely committed to the task of fiscal adjustment and improve the development prospects of the country”